Appellate Authority To Bear In Mind The Predicaments Faced By Taxpayers On Introduction Of GST Procedures: Orissa High Court

The Orissa High Court has held that the Appellate Authority should have borne in mind the predicament faced by taxpayers on the introduction of a new set of procedures by way of the promulgation of the CGST Act and rules and that time is required to be taken to get acquainted.

The division bench of Justice Jaswant Singh and Justice Murahari Sri Raman has observed that it preferred to exercise its writ jurisdiction to undo prejudice and injustice caused to the petitioner as the Appellate Tribunal has not yet been constituted as per Section 109 of the CGST Act. There was no alternative remedy available for the petitioner to question the veracity of the order passed in the first appeal.

The court stated that in the event the GST registration number is not restored, the petitioner would not be in a position to raise a bill as an e-invoice system has been put in place in the GST regime. So, if the petitioner is denied the revival of the GST registration number, it would affect his right to livelihood (Article 21 of the Constitution of India) as well as his right to carry on business (Article 19(1)(g)). If he is denied his right to livelihood because of the cancellation of GST registration, he has no remedy of appeal, especially when the Appellate Tribunal has not been constituted in terms of Section 109 read with Section 112. It would be tantamount to a violation of the provision enshrined under Article 21 of the Constitution of India as the right to livelihood springs from the right to life avowed under Article 21.

"The introduction of the GST regime presupposes a hassle-free and citizen-friendly taxation process, and the taxpayer is not to be treated as a person hostile to the Department. It is obvious that if the taxpayer adopts clandestine business and adopts dubious devices to evade payment of tax, then he has to be dealt with sternly," the court said.

The petitioner/assessee assailed the Order passed in Appeal by the Additional Commissioner, GST (Appeals) (Appellate Authority) and questioned the propriety of the Order of the Superintendent, Berhampur-I Range, Berhampur Division (Registering Authority). The Registering Authority, in the exercise of power under Section 29(2)(c) of the CGST Act, cancelled the registration.

The petitioner approached the high court as the Registering Authority proceeded to cancel the GSTIN of the assessee as there was non-filing of returns for consecutive periods of six months.

The petitioner contended that the Appellate Authority made an observation in the Appellate Order that the application for revocation of cancellation of registration as envisaged in Section 30 of the CGST Act read with Rule 23 of the CGST Rules was not filed within the prescribed period.

The petitioner stated that instead of rejecting the appeal on the ground of limitation by taking a pedantic view, the authorities should have appreciated the genuine difficulty faced by not only the petitioner but also other similarly placed suppliers and recipients.

The petitioner submitted that the Appellate Authority was not powerless to grant the opportunity to the petitioner to deposit tax, interest, coupled with penalty and late fee and relegate him to approaching the Registering Authority under Section 30 of the CGST Act by condoning the delay, as has been done by the Courts in many cases.

The court allowed the appeal of the assessee and stated that the petitioner is entitled to carry the matter before the Appellate Tribunal even after a lapse of 5 years. The Appellate Tribunal is not constituted under Section 109.

The court permitted the petitioner to file returns for the period prior to the cancellation of registration, if the returns have not already been filed, together with tax defaulted, along with interest for such belated payment of tax within a period of 60 days.

The court clarified that the payment of tax/interest/penalty/fine/fee etc. shall not be allowed to be made or adjusted from and out of any Input Tax Credit which may be lying unutilized or unclaimed in the hands of the petitioner.

The court directed the department to take suitable steps by instructing GST Network, New Delhi to make suitable changes in the architecture of the GST Web Portal to enable the petitioner to file his returns and pay the tax, interest, penalty, fine, and fee. The department is responsible for ensuring that there are no technical glitches.

Case Title: Durga Raman Patnaik Vs Additional Commissioner of GST

Case No: W.P.(C) No. 7728 of 2022

Citation: 2022 LiveLaw (Ori) 149 

Date: 13.10.2022

Counsel For Petitioner: Advocate Ramesh Chandra Jena

Counsel For Respondent: Senior Standing Counsel Subash Chandra Mohanty

Click Here To Read Order